Question 4.2 Perfect Flooring installs oak and other hardwood floors in homes and businesses. The company uses an activity-based costing system for its overhead costs. The company has provided the following data concerning its annual overhead costs and its activity-based costing system: Overhead Costs: Production overhead $190,000 Office expense 140,000 Total $330,000 Distribution of resource consumption: Activity Cost Pools Installing Floors Job Support Other Total Production overhead 40% 40% 20% 100% Office expenses 10% 60% 30% 100% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows: Activity Cost Pool Annual Activity Installing floors 200 squares Job support 160 jobs Other Not applicable A "square" is a measure of area that is roughly equivalent to 1,000 square metres.Required: Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below: Installing Floors Job Support Other Total Production overhead Office expense Total Compute the activity rates (i.e., cost per unit of activity) for the Installing Floors and Job Support activity cost pools by filling in the table below: Installing Floors Job Support Production overhead Office expense Total Compute the overhead cost, according to the activity-based costing system, of a job that involves installing 3.4 squares.
Question 4.2
Perfect Flooring installs oak and other hardwood floors in homes and businesses. The company uses an activity-based costing system for its
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Overhead Costs: |
|
|
Production overhead |
$190,000 |
|
Office expense |
140,000 |
|
Total |
$330,000 |
Distribution of resource consumption:
|
|
Activity Cost Pools |
|||
|
|
Installing Floors |
Job Support |
Other |
Total |
|
Production overhead |
40% |
40% |
20% |
100% |
|
Office expenses |
10% |
60% |
30% |
100% |
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. The amount of activity for the year is as follows:
|
Activity Cost Pool |
Annual Activity |
|
Installing floors |
200 squares |
|
Job support |
160 jobs |
|
Other |
Not applicable |
A "square" is a measure of area that is roughly equivalent to 1,000 square metres.
Required:
- Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:
|
|
Installing Floors |
Job Support |
Other |
Total |
|
Production overhead |
|
|
|
|
|
Office expense |
|
|
|
|
|
Total |
|
|
|
|
- Compute the activity rates (i.e., cost per unit of activity) for the Installing Floors and Job Support activity cost pools by filling in the table below:
|
|
Installing Floors |
Job Support |
|
Production overhead |
|
|
|
Office expense |
|
|
|
Total |
|
|
- Compute the overhead cost, according to the activity-based costing system, of a job that involves installing 3.4 squares.
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